PRE-ACTION DISCLOSURE: CONDUCT, DISCRETION AND THE “FISHING EXPEDITION” ANALOGY MAY NOT BE A GOOD ONE

It is relatively rare for there to be a High Court judgment on the issue of pre-action disclosure. In Taylor Wimpey UK Ltd v Harron Homes Ltd [2020] EWHC 1190 (TCC) Mr Justice Fraser had some interesting observations on the duty of the applicant when making the application, and the utility of making an application in this case.

“HH maintained that this application was what it termed a “fishing expedition”. What that term is usually taken to mean is that a party is seeking documents in the hope that something of use might turn up. I doubt that this is the aspiration with which expert fishermen and fisherwomen embark upon their trips; but given the court’s experience in this respect is strictly limited to the term as it is used in disclosure applications, I am confident that HH and Ms Briggs do not intend the description to be a complimentary one.”

THE CASE

The applicant made an application for pre-action disclosure. The original application was made for an order without a hearing. The evidence originally adduced in support of the application was, the judge held, inadequate. This has a part to play in the exercise of discretion.

THE JUDGE’S INITIAL OBSERVATIONS

These proceedings concern an application, dated 13 March 2020, in which the applicant Taylor Wimpey UK Ltd (“TW”) seeks pre-action disclosure under CPR Part 31.16 against the respondent, Harron Homes Ltd (“HH”). That application notice was issued on 13 March 2020, which was 10 days before the national lockdown was imposed on 23 March 2020, with all that has entailed. The hearing was therefore conducted remotely by the court using Skype for Business.

The application notice is somewhat unusual in that it sought to have the application, which was almost certainly (or at least very likely) to be contested, determined without any hearing at all. Specifying that such applications should be dealt with “without a hearing” by ticking that box in Section 5 of the Application Notice N244 is never likely to be constructive, when the subject matter of applications is highly contentious, which this one was likely to be. It is not helpful to the administration of court business.

There is another feature of this application which is that the factual circumstances of the dispute between the parties, as they were presented to the court in early May after evidence from HH had been served, are rather different to how these were dealt with in the evidence lodged by TW in support of the application. Whilst in inter partes hearings of this type, there is not the same duty of full and frank disclosure that there is upon a party who, for example, comes to the court ex parte (which is a high burden, as the other side will not be present or represented) it is not helpful for an applicant to fail to include or address a central factor that will be significant and relevant to the application, particularly where (as here) the court’s discretion is involved.The factor to which I refer in this case is the service by HH of a notice to refer the dispute to expert determination. This occurred prior to the issuing of the application; on one view, the application was issued in response to that, although whether that is correct or not does not matter. HH had also given written confirmation to TW that court proceedings would not be commenced; TW had also refused to engage in the expert determination process, notwithstanding its inclusion in the Collaboration Agreement. This is a subject to which I will return.

Regardless of that, the substantive application was heard by me on 7 May 2020. At the conclusion of that hearing, I indicated to the parties the outcome of the application, and explained that I would give detailed reasons for my decision in writing. These are those reasons.

THE EVIDENCE IN SUPPORT

The judge had criticisms of the way that the evidence in support had been adduced.

The application is supported by three witness statements by Mr Akinbode, a partner in the firm of solicitors representing the applicant TW. The first two of these statements are dated 13 March 2020, and 28 April 2020. That second statement is also said to have narrowed or clarified the categories of documents sought, and whereas there were originally said to be four categories (set out in paragraph 3.2 of Mr Akinbode’s first statement) there are now the three I have identified at [7] above, these being identified in paragraph 1.6 of his second statement. The application is opposed by HH, and a witness statement in response was served dated 4 May 2020, that statement being made by Mr Morrison, a partner in the firm of solicitors representing the respondent HH.

The dates of the different witness statement do not, however, tell the full story in at least one respect. In the skeleton argument served for HH, counsel for HH, Ms Briggs, stated that Mr Akindobe’s second statement, which clarified the documents sought, “was served on Monday 4 May (the day upon which Harron was due to serve its evidence in response). It is not clear why this clarification was not given in his first statement.”

Given the hearing itself had been set down for 7 May 2020, a decision by TW to serve a statement (which was, on its face, dated almost one week earlier than it was served in any case) on the Monday of the week of the hearing, and on the day when HH was due to serve its own evidence in response, could hardly be said to be helpful. Whether this delay in serving the statement was inefficiency – which itself would have been unhelpful – or litigation game playing, is not entirely clear.

Mr Morrison’s statement did however add a considerable, and in my judgment essential, layer of detail to the underlying dispute between the parties that was relevant to the application itself. Although Mr Akindobe’s second statement referred to the issuing by HH of a notice of dispute under the Collaboration Agreement dated 10 March 2020 to seek expert determination of the dispute (which it can be seen pre-dated his first statement) all that is said in the second statement, in terms of progress of that reference, is that “HH never appointed an expert” either in that reference, or an earlier one where the notice was dated 30 October 2019. Mr Morrison’s statement, on the other hand, together with the correspondence exhibited to it, makes it clear that TW was, as of the date of that statement and the date of the application, refusing to agree to the appointment of an expert under the notice of 10 March 2020. Nor would TW agree to the appointment of an expert under the earlier notice either. These are, in my judgment, highly material facts. The expert determination procedure is also of central relevance to the application. This subject is barely addressed in the evidence in the first two witness statements submitted by TW to support its application. Indeed, TW’s refusal to engage in that expert determination, and to challenge it on the basis of alleged lack of jurisdiction on the part of the expert, is simply not addressed at all.

After Mr Morrison’s statement was served, a further witness statement was served from Mr Akindobe. This was his third statement, and is dated 5 May 2020, very close to the hearing. That statement included some assertions as to the law, and quoted extracts of the Collaboration Agreement between the parties (which I deal with in detail below). It also went into considerable detail concerning the chronology of the dispute from October 2019 up to the date of the statement, and (for the first time, at least so far as evidence from TW is concerned) made it clear that TW was refusing to engage in the expert determination procedure expressly included in the Collaboration Agreement, taking what is said to be a jurisdictional objection. This, as I have explained, was missing from each of his first two statements.

I gave counsel for TW, Mr Owen, an opportunity to explain this at the hearing itself. He stated that it was understandable that TW’s solicitors had not dealt with this subject in any detail, due to the detail of the chronology of the dispute between the parties. He also explained that neither of the references by HH of the dispute to expert determination “had been pursued”. I do not consider that this is the correct way to describe a dispute resolution process which HH initiated, twice (once in October 2019, and once in March 2020) and in respect of which TW refused to agree to the nomination of an expert, and in respect of which TW challenged the jurisdiction of the expert, in respect of both references.

15. All of the authorities make it clear that, provided the jurisdictional threshold required under CPR Part 31.16 is surpassed, whether an order under CPR Part 31.16 is made is a matter of the court’s discretion, and this requires a fact based analysis that will be different from case to case. I consider that HH’s attempts to refer this dispute to expert determination (in accordance with the express provision to that effect within the Collaboration Agreement between the parties); TW’s stance in those proceedings; and the statements made on HH’s behalf to TW that proceedings in the High Court would not be issued; are all factors relevant to the exercise of that discretion. None of these matters are sufficiently dealt with in the evidence in support of the application. I am however satisfied that as of the date of the hearing, the evidence by both sides gave me sufficient information on these matters for me correctly to consider all the matters relevant to determine the application fairly and in accordance with both the Rules and the authorities.

THE LEGAL PRINCIPLES

The judge then considered the relevant law.

C. The law

Turning to the relevant principles, the power to order pre-action disclosure (which is contained in section 33(2) of the Senior Courts Act) is codified in CPR Part 31.16. That lays down the requirements that have to be satisfied for an order for pre-action disclosure.

There are the following elements of the test under CPR Part 31.16 that must be satisfied before an order will be made. The rule states at Part 31.16(3):

“(3) The court may make an order under this rule only where —

(a) the respondent is likely to be a party to subsequent proceedings;

(b) the applicant is also likely to be a party to those proceedings;

(c) if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and

(d) disclosure before proceedings have started is desirable in order to:

i. dispose fairly of the anticipated proceedings;

ii. assist the dispute to be resolved without proceedings; or

iii. save costs.”

The leading authority on this ability by the court to order the disclosure of documents prior to proceedings actually starting is Black v Sumitomo [2001] EWCA Civ 1819. In that case Rix LJ laid down certain principles and explained the approach that should be taken by the court when considering such an application. He explained that there was both a jurisdictional threshold and a discretionary test, and said at [73] the following:

“The jurisdictional threshold is not, I think, intended to be a high one. The real question is likely to be one of discretion, and answering the jurisdictional question in the affirmative is unlikely in itself to give the judge much of a steer as to the correct exercise of his power.”

He also stated at [77] that:

“It also seems to me to follow that if there would be considerable doubt as to whether the disclosure stage would ever be reached, that is a matter which the court can and should take into account as a matter of its discretion.”

Finally, Rix LJ accepted that is some cases it would or may be difficult to keep the two stages of the process separate from one another:

“[82] Of course, since the questions of principle and of detail can merge into one another, it is not easy to keep the two stages of the process separate. Nor is it perhaps vital to do so, provided however that the court is aware of the need for both stages to be carried out. The danger, however, is that a court may be misled by the ease with which the jurisdictional threshold can be passed into thinking that it has thereby decided the question of discretion, when in truth it has not. This is a real danger because first, in very many if not most cases it will be possible to make a case for achieving one or other of the three purposes, and secondly, each of the three possibilities is in itself inherently desirable.”

The first three requirements of the rule are clearly threshold tests. Here, both TW and HH would be parties in subsequent proceedings, and the documents sought would be disclosable under standard disclosure. Although, given the attempt by HH to engage the contractual dispute resolution mechanism, there must be considerable doubt as to whether that disclosure stage would ever be reached (because there is doubt that HH will ever initiate those proceedings in court, given its attempt to use the expert determination process) that is something that Black makes clear ought to be taken account of in the discretionary consideration that is required once jurisdiction for such an order has been established.

The requirement in (3)(d) of the rule is treated as involving both a jurisdictional element as well as a discretionary element. The jurisdictional element is that an applicant must show that there is a real prospect in principle of one of the stated objectives in 3(d) being met. The discretionary element is whether, as a matter of discretion, disclosure is considered to be desirable.

“It must be that, in almost every dispute, a case could be made out that pre-action disclosure would be useful in achieving a settlement or otherwise saving costs. It follows, in my judgment, that, in order to obtain pre-action disclosure, the circumstances must be outside “the usual run” to allow the hurdle to be surmounted: Trouw UK Ltd v Mitsui & Co (UK) Plc [2006] EWHC 863 (Comm) at [43]. The point is a somewhat barren one. The absence of any convincing grounds for distinguishing the case from the normal run would be telling grounds for not exercising the court’s discretion. But for the moment I will consider the topic in the context of jurisdiction.”

Miss Briggs for HH submitted that it should be particularly out of the normal where an applicant was the putative defendant, as TW is here, rather than a party seeking documents pre-action in order to know whether they have a claim or not, and/or if so against whom, and what the details of their causes of action are. I reject that submission. I do not consider that the fact that a party seeking pre-action disclosure may be a potential defendant in those proceeding rather than a claimant makes any difference to the jurisdictional hurdle to be surmounted, particularly where as here that party states it has a counterclaim. It might be said that if an applicant were likely to be a defendant, rather than a claimant, the discretion might be exercised differently in the sense that “saving costs” must mean (or at least include) costs of the litigation, and there is extra uncertainty in that if the applicant itself is not the entity contemplating commencing those proceedings. However, in my judgment this type of case specific factor can, and should, be considered at the discretion stage.

In Jet Airways (India) Ltd v Barloworld Handling Ltd [2014] EWCA Civ 1311 the Court of Appeal considered an appeal from an order for pre-action disclosure made by Burton J in the Commercial Court. The underlying facts concerned an extensive fire at Heathrow Airport and its cause. It appeared to have started in a forklift truck. The applicant successfully persuaded Burton J that maintenance records and such like of the respondent’s forklift fleet for a period of two years prior to the fire ought to be disclosed, and he found that the experts would be “stymied” without such documents as the actual forklift in question had (not surprisingly) been completely destroyed in the fire. The appeal against that decision failed. Moore-Bick LJ, in giving the judgment, stated that Black was the leading authority on the interpretation of the rule. I would add that disclosure of the type sought in that case, on those facts, appears to me to be typical of the unusual type of case in which such an order would be justified. The potential claimant, literally, would have had nothing for its experts to consider concerning its potential claim absent the documents it sought. Here, it can be seen from the categories of documents sought by TW that this simply is not the case.

The parties also cited a number of authorities that are first instance applications of the principles set down in Black. Given the exercise of the discretion is so highly fact specific, the fact that in other cases such orders have, or have not, been made does not necessarily take one very far. However, one first instance case which is of direct relevance is that of Birse Construction Ltd v HLC Engenharia SA[2006] EWHC 1258 (TCC) because it contains dicta in relation to TCC cases generally. Jackson J (as he then was) stated at [25] the following:

“In many TCC cases, disclosure is a labour-intensive exercise and a major head of costs. Therefore, disclosure before the proper time is not something which should be lightly ordered. On the other hand, the court encourages the early and candid exchange of information in the hope that this will promote settlement before excessive costs are incurred. Alternatively, it is hoped that the parties may at least narrow the issues between them. This is part of the philosophy which underlies the Pre-action Protocol for Construction and Engineering Disputes. It should be noted that this is the only pre-action protocol which requires a meeting between the parties before they resort to litigation.”

He also added at [29] “Given the level of co-operation between opposing parties, which is a normal feature of TCC litigation, I would not expect an order for pre-action disclosure to be appropriate in most cases which come before this court.”

I fully endorse those views and cannot usefully add to them, other than making the following two observations, the first of which will be expanded upon in Section E of this judgment. The Collaboration Agreement between the parties in this case contains an expert determination provision, expert determination being a type of alternative dispute resolution or ADR. ADR has a vast number of advantages to parties to commercial agreements. It enables parties to have their disputes decided privately, by specialists either chosen by the parties jointly or, in default of agreement, by a body specifically appointed for that purpose. It is almost always far quicker than litigation, and almost always far cheaper, to have disputes resolved in this way. The court in all cases will be astute to prevent pre-action disclosure being used either to frustrate, impede or interfere with contractually agreed ADR mechanisms.

The second observation is to note that the parties in this case participated in the pre-action protocol, and TW attended the meeting of the parties required under the protocol, about one calendar year before requesting these documents. This is a factor relevant to the exercise of the court’s discretion.

THE EXERCISE OF THE COURT’S DISCRETION

The judge refused to exercise the discretion in the applicant’s favour.

This is an entirely routine commercial dispute between two parties. There is certainly nothing unusual or out of the normal run of things in this case. There are two particular features which, however, will not be present in many commercial disputes, which in my judgment are central to the exercise of the court’s discretion.

These are as follows. Firstly, the fact that the respondent HH is attempting to have the dispute resolved by the contractual mechanism contained in clause 24 which provides for expert determination. Secondly, the fact that TW is attempting to avoid that process by taking jurisdictional objections. Whether these objections will prove to be ultimately well-founded or not is not something that can be resolved on this application. However, it is notable, in my judgment, that the documents which TW seeks are clearly those that could be obtained within that expert determination process.This is because, as explained at [24] above, the expert’s powers contained in Schedule 10 to the Collaboration Agreement clearly give the expert the ability to order production of these documents. Mr Owen accepted that the expert would have the power to order production of these documents. In one sense, this application could be seen as an interference with that expert process. However, whether it is or not, the attempts by HH to adopt the contractually agreed mechanism to resolve the dispute, rather than issue proceedings in the High Court, is an important factor.

A further feature is that the parties to this dispute have already engaged in the pre-action protocol process, including holding a meeting pursuant to that protocol in February 2019. TW evidently did not consider the documents which it seeks in this application to be particularly germane to that process, as although it did request some documents during the protocol period (which were provided), it did not request those the subject of this application. Yet a further feature relevant to the exercise of the discretion is that HH have said, through their solicitor, that HH does not intend to issue proceedings.

HH maintained that this application was what it termed a “fishing expedition”. What that term is usually taken to mean is that a party is seeking documents in the hope that something of use might turn up. I doubt that this is the aspiration with which expert fishermen and fisherwomen embark upon their trips; but given the court’s experience in this respect is strictly limited to the term as it is used in disclosure applications, I am confident that HH and Ms Briggs do not intend the description to be a complimentary one.

Mr Owens sought to persuade me that TW was, as he put it “outside the loop”, an expression taken from the dicta of Jackson J in Birse. I disagree with that categorisation. They are not remotely outside the loop.Both TW and HH were jointly involved in attempting to resolve the drainage issues initially, in terms of investigations on site. TW is a party to the Collaboration Agreement. In any event, the Collaboration Agreement agreed expressly which of the parties would be responsible for which elements of the collaboration, and for which elements of the works. HH was designated to be the contact with Yorkshire Water, for example. Mr Owen also submitted that there were, as he put it, potentially decisive points of principle on liability and causation which could not be determined without the documents. I disagree with him about that too. The dispute between these parties seems to me to be one that would turn upon expert analysis, and there is an expert determination procedure available to do precisely that. That submission is somewhat undermined by the fact that TW did not consider these documents to contain potentially decisive points of principle on liability and causation until February 2020, even though the pre-action protocol process started in late 2018.

So far as the reference to expert determination is concerned, Mr Owen did his best to persuade me either that this was not particularly relevant, and/or that because a letter of claim had been sent by HH under the pre-action protocol, proceedings were still contemplated by HH. He also stated, referring to the commencement of the expert determination process (in paragraph 42 of TW’s skeleton) “However, clause 38.2 of the Collaboration Agreement contains an exclusive jurisdiction clause in favour of the courts of England and Wales.”

All that provision in the contract does is the same as explained by Thomas LJ in Barclays Bank v Nylon Capital LLP[2011] EWCA Civ 826 where, in the context of an agreement that contained both an expert determination clause and an exclusive jurisdiction of the court clause, the future Lord Chief Justice explained the following at [28]:

“In contradistinction [to arbitration clauses] expert determination clauses generally presuppose that the parties intended certain types of dispute to be resolved by expert determination and other types by the court (or if there is an arbitration clause by arbitrators). The rationale of Fiona Trust does not therefore apply, as the parties have agreed to two types of dispute resolution procedure for disputes which might arise under the agreement. The LLP agreement illustrates this: the parties agreed by Clause 26.2 to submit to the exclusive jurisdiction of the English courts, but reserved specific disputes under Clause 26.1 to the expert. They carved out of the exclusive jurisdiction of the English courts, to which they had submitted all disputes between the parties, a limited class of dispute.”

Without finally determining the point, because the issue on this pre-action disclosure application does not require final determination of any challenge to the jurisdiction of any expert appointed to undertake the expert determination procedure, the dispute between the parties as it was explained to the court in the evidence appears to me, at least prima facie, to be precisely the type of dispute that falls within the expert determination procedure agreed by the parties in clause 24.

Mr Owen also sought to persuade me that, because clause 24 required a decision from the expert within 28 days, that was another reason why I ought to make the order TW seek on the application. I reject that submission. There is nothing in the evidence submitted by TW to support that submission. Further, 28 days is the contractually specified period for the expert determination process. Yet further, deadlines such as that can be extended by agreement. Finally, in the age of electronic communications, with almost instantaneous transmission of documents, 28 days is a generous period. All of these points also simply reinforce how any order on application in the terms sought is not justified.

I consider that all the facts of this case demonstrate how unlikely it is that the disclosure stage of any litigation in the TCC will be reached in this case. In arriving at that conclusion, I have taken into account the full chronology of the dispute, including all the correspondence, together with the parties’ earlier intention to litigate, and the more recent reference by HH to expert determination. HH’s stated intention to use expert determination rather than litigation is one of the factors that I have considered, but it is not the determinative point.

Despite Mr Owen’s polished submissions, I consider that there is nothing in this case that would justify an order in TW’s favour in any event, even absent the ongoing expert determination reference. When one takes that expert determination reference into account, however, it is plain that this application ought not to succeed for this reason. Making such an order would run the very real risk of contravening the principle which I have explained at [41] above, namely allowing pre-action disclosure to be used either to frustrate, impede or interfere with the contractually agreed ADR mechanisms contained in the Collaboration Agreement. It would also undoubtedly do the opposite of what Jackson J identified in [25] of Birse, namely promote settlement. It would, in my judgment, impede the expert determination process, and interfere with and undermine any expert appointed to determine the dispute, and also directly impact upon the contractually agreed timetable for that to occur.

Nor does it matter, in my judgment, whether such interference is intentional, or whether it be merely a side-effect of making such an order. Here, the documents necessary or desirable for the proper conduct of the expert determination reference are a matter for the expert, not for the court. They certainly are not desirable (still less necessary) within the test contained in CPR Part 31.16. I therefore dismiss the application.

Finally, although this is not determinative, I consider it notable that TW did not request these documents during the pre-action protocol period itself, which ran until February 2019.

F. Conclusion

It follows therefore that the application by TW must fail. I indicated this result to the parties at the conclusion of the hearing, and therefore dealt with costs on that occasion. Accordingly, there are no consequential matters that remain to be dealt with. I am grateful to both counsel and solicitors for their helpful submissions, and the cooperative and constructive approach to the remote hearing. Such hearings are not entirely straightforward, and require greater flexibility and co-operation than parties to litigation – even specialist litigation – are used to.